Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7359848 | Journal of Economic Theory | 2014 | 23 Pages |
Abstract
We consider a co-evolutionary model of social coordination and network formation where agents may decide on an action in a 2Ã2-coordination game and on whom to establish costly links to. We find that if agents may only support a limited number of links payoff dominant conventions will emerge in the long run, contrasting the case of unconstrained interactions where risk dominant conventions arise for a wide range of parameters. Under constrained iterations, already a small number of agents choosing the payoff dominant action enables agents - by linking up to those agents and choosing the payoff dominant action - to secure themselves the highest possible payoff. We extend our model by discussing constrained interactions in the context of general mÃm games, convex payoff functions, heterogeneous constraints, and frictions in link formation.
Related Topics
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Authors
Mathias Staudigl, Simon Weidenholzer,